Nabisco Group Holdings Corp. (NYSE:NGH – news) and Nabisco Holdings Corp. (NYSE:NA – news) today announced results for the second quarter ended June 30, 2000.
Nabisco worldwide net sales for the quarter increased 12 percent to $2.26 billion from $2.02 billion in last year’s second quarter.
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For NGH, net income in the second quarter rose to $76 million, or $.23 per diluted share, up 28 percent from $.18 per diluted share in the same quarter of 1999. Results from both years exclude special items and the 1999 second quarter results also exclude discontinued operations and an extraordinary loss on early debt redemption.
For NA, second quarter net income, excluding special items, increased to $98 million, or $.37 per diluted share, up 32 percent from $.28 per diluted share in the same quarter last year. Including special items, second quarter net income was $98 million, or $.37 per diluted share, up 54% from $.24 per diluted share in the second quarter last year.
“Our second quarter was one of exceptional accomplishments,” said James M. Kilts, president and chief executive officer of Nabisco.
“We entered into agreements that will yield greatly increased value for both our NA and NGH shareholders,” he said. “We continued to build momentum across our portfolio of businesses that we anticipate will be maintained throughout the second half of the year. The result should be a full-year performance that places Nabisco at the top of the industry.”
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By GlobalDataMr. Kilts noted that Nabisco’s U.S. businesses are performing at exceptionally high levels as increased marketing support and ongoing productivity programs are driving improved operating performances. Nabisco International delivered sound sales results, but experienced lower profits.
In the second quarter, U.S. Biscuit continued its strong performance with improved sales and earnings gains and its seventh consecutive quarter of volume and share improvement in cookies and crackers.
Nabisco Foods Company also posted another excellent quarter. Sales and earnings were up sharply on continued volume gains in nuts, snacks and several of its premium grocery products. The unit’s base non-chocolate confectionery operations posted good quarterly gains, further enhanced by the addition of the Favorite Brands confectionery business, which was acquired last year.
Although Nabisco International posted a sales gain for the quarter, earnings were negatively impacted by its Iberian business and higher marketing investments in Brazil. Nabisco International’s business will be enhanced through the addition of the former United Biscuits’ operations in China, Hong Kong and Taiwan. The company also is the strategic partner in the new consortium of investors that now owns United Biscuits.
NABISCO GROUP HOLDINGS CORP. (NGH)
The following earnings reflect NGH’s share of Nabisco Holdings Corp.’s results and are reduced by NGH’s administrative and financing costs.
Second Quarter Results Excluding Special Items, Discontinued Operations and Extraordinary Items
— Net sales increased 12% to $2.26 billion from $2.02 billion
— Operating company contribution increased 14% to $285 million from $250 million
— Net income increased 29% to $76 million from $59 million
— Net income per diluted share increased 28% to $.23 from $.18
— Cash net income increased 18% to $112 million from $95 million Second Quarter Reported Results:
— Net sales increased 12% to $2.26 billion from $2.02 billion
— Operating company contribution increased 23% to $285 million from $231 million
— Operating income increased 35% to $239 million from $177 million
— Income from continuing operations increased 100% to $76 million from $38 million
— Net income decreased 97% to $76 million from $2.69 billion
— Net income per diluted share decreased 97% to $.23 from $8.25
— Cash net income decreased 96% to $112 million from $2.72 billion
Six-Month Results Excluding Special Items, Discontinued Operations and Extraordinary Items
— Net sales increased 12% to $4.33 billion from $3.88 billion
— Operating company contribution increased 13% to $511 million from $452 million
— Net income increased 29% to $121 million from $94 million
— Net income per diluted share increased 28% to $.37 from $.29
— Cash net income increased 16% to $192 million from $165 million
Six-Month Reported Results:
— Net sales increased 12% to $4.33 billion from $3.88 billion
— Operating company contribution increased 22% to $511 million from $418 million
— Operating income increased 32% to $410 million from $311 million
— Income from continuing operations increased 156% to $123 million from $48 million
— Net income decreased 96% to $123 million from $2.76 billion
— Net income per diluted share decreased 96% to $.38 from $8.47
— Cash net income decreased 93% to $194 million from $2.83 billion
(2000 and 1999 special items are covered in the accompanying notes at the end of the press release. Definitions for the terms operating company contribution and cash net income are covered in the accompanying notes section of the Consolidated Condensed Statements of Income.)
Discontinued operations reflect the 1999 results from the former tobacco businesses and RJR Nabisco corporate headquarters’ expenses. These results have been segregated and reported as discontinued operations in the attached Consolidated Condensed Statements of Income. In 1999, the former RJR Nabisco International tobacco business was sold and the domestic tobacco operations of R.J. Reynolds Tobacco Co., which now trades as RJR, was subsequently spun-off to shareholders. The results from these businesses are excluded from Sales, Operating Company Contribution and Operating Income.
NABISCO HOLDINGS CORP. (NA)
Second Quarter Results Excluding Special Items:
— Net sales increased 12% to $2.26 billion from $2.02 billion
— Operating company contribution increased 16% to $291 million from $250 million
— Net income increased 29% to $98 million from $76 million
— Net income per diluted share increased 32% to $.37 from $.28
— Cash net income increased 18% to $143 million from $121 million
Second Quarter Reported Results:
— Net sales increased 12% to $2.26 billion from $2.02 billion
— Operating company contribution increased 26% to $291 million from $231 million
— Operating income increased 38% to $245 million from $177 million
— Net income increased 51% to $98 million from $65 million
— Net income per diluted share increased 54% to $.37 from $.24
— Cash net income increased 30% to $143 million from $110 million
Six-Month Results Excluding Special Items
— Net sales increased 12% to $4.33 billion from $3.88 billion
— Operating company contribution increased 15% to $521 million from $452 million
— Net income increased 31% to $158 million from $121 million
— Net income per diluted share increased 31% to $.59 from $.45
— Cash net income increased 18% to $247 million from $209 million
Six Month Reported Results:
— Net sales increased 12% to $4.33 billion from $3.88 billion
— Operating company contribution increased 25% to $521 million from $418 million
— Operating income increased 35% to $420 million from $311 million
— Net income increased 56% to $158 million from $101 million
— Net income per diluted share increased 55% to $.59 from $.38
— Cash net income increased 31% to $247 million from $189 million
(2000 and 1999 special items are covered in the accompanying notes at the end of the press release. Definitions for the terms operating company contribution and cash net income are covered in the accompanying notes section of the Consolidated Condensed Statements of Income.)
2000 special reporting period items include a $27 million pre-tax ($18 million after tax) restructuring credit resulting primarily from higher proceeds than anticipated on the sale of several facilities included in the 1998 restructuring program and lower than anticipated spending for certain projects. As of June 30, 2000, the restructuring program has been completed and savings objectives will be achieved. Offsetting this credit was a loss on the sale of businesses which were included as part of the previously announced agreement to invest in a consortium associated with the purchase of United Biscuits. The loss on the sale of these businesses amounted to $18 million on both a pre-tax and after-tax basis which included a write-off of previously recorded cumulative translation adjustments of $51 million. There is no after-tax impact as a result of these transactions.
U.S. Biscuit Highlights
Nabisco Biscuit Company continued its strong performance with gains in sales, volumes, shares and margins. Operating company contribution for Biscuit advanced 13 percent for the quarter to $146 million. Sales were $936 million, up 4 percent over a year ago.
Biscuit’s marketing and new product activity drove a 6 percent gain in its cookie and cracker volumes for the quarter. Contributing to the increase were a number of new products including Cafe Cremes cookies, Mini Chips Ahoy!, Baseball Ritz, and a new flavor of Newtons, Tropical Strawberry-Kiwi. Market share advanced more than a full percentage point to 40.6% in a category that grew a healthy 4 percent.
Another factor in Biscuit’s continued momentum is the increasing efficiency and effectiveness of its reorganized direct store delivery sales force. The company said it expects further benefits to accrue as additional experience-based refinements are made at both the account and retail store levels.
Nabisco Foods Company Highlights
Nabisco Foods Company posted another very strong quarter with net sales up 34 percent to $733 million over the prior year and operating company contribution up 45 percent to $106 million. Excluding sales of Favorite Brands products, net sales grew 8 percent versus the prior year.
The exceptional performance was led by Nabisco Foods Company’s non-biscuit snacking businesses, with peanuts, mixed nuts and Life Savers candies posting strong sales increases.
Several new products, including Creme Savers candies and Ice Breakers Cool Mints and Breath Savers Cool Blasts intense mints also contributed to the gains.
The integration of Favorite Brands into Nabisco’s domestic confections business continues with planned portfolio trimming on track and earnings performance ahead of schedule.
International Highlights
International sales for the second quarter were up 2 percent to $589 million and operating company contribution of $39 million was down 19 percent over the prior year. Excluding the impact of unfavorable foreign currency translation, sales increased by 5 percent.
Solid earnings performances in Canada and several Latin American markets, including the Andean and Caribbean regions, were more than offset by results in Iberia, where earnings were negatively impacted by lower volumes, higher costs, and weakness in the Euro. Earnings were also lower in Brazil, due to higher marketing spending levels.
Nabisco is a major international manufacturer of biscuits, snacks, and premium grocery products, including such well-known U.S. brands as Oreo, SnackWell’s, and Chips Ahoy!; Ritz crackers; A.1. steak sauces; Grey Poupon mustards; Life Savers and Trolli confections; Planters nuts and snacks; and Milk-Bone dog treats. International products include Christie, Peek Freans, Terrabusi cookies and crackers; Royal dessert mixes, Fleischmann’s yeast; and several Nabisco global brands – Oreo, Ritz and Chips Ahoy!. Nabisco markets products in the United States, and more than 85 other countries around the world.
Note to the press release on special items:
NABISCO GROUP HOLDINGS CORP. (NGH)
First Half 2000 special items totaled $11 million income ($1 million after tax, net of minority interest in Nabisco, or $.01 per share) as follows:
— First quarter special items include $2 million of interest income
($1 million after tax or $.01 per share) included in other income
(expense), net on the investment of funds transferred from RJR
Nabisco, Inc. in satisfaction of certain liabilities assumed by
Nabisco Group Holdings Corp. prior to the spin-off to shareholders of domestic tobacco operations.
— Second quarter special items of $9 million income ($0 after tax, net of minority interest) included in other items include:
a restructuring credit of $27 million ($14 million after tax, net of minority interest) offset by a loss on the sale of businesses which were included as part of the previously announced agreement to invest in a consortium associated with the purchase of United Biscuits. The loss on the sale of these businesses amounted to $18 million ($14 million after tax, net of minority interest) which included a write-off of previously recorded cumulative translation adjustments of $51 million.
First Half 1999 special items totaled $84 million expense ($46 million after tax, net of minority interest in Nabisco or $.15 per diluted share) as follows:
— First quarter special items include restructuring-related expenses of $15 million ($7 million after tax, net of minority interest or $.02 per share) and $31 million of interest expense ($18 million after tax or $.06 per share) related to Trust Originated Preferred Securities redeemed in the second quarter of 1999.
— Second quarter special items include restructuring-related expenses of $19 million ($9 million after tax, net of minority interest or $.03 per share), $24 million of interest expense ($15 million after tax or $.05 per share) related to Trust Originated Preferred Securities redeemed in the second quarter of 1999 partially offset by $5 million of interest income ($3 million after tax or $.01 per share) on the investment of funds transferred from RJR Nabisco, Inc. in satisfaction of certain liabilities assumed by Nabisco Group Holdings Corp. prior to the spin-off to shareholders of domestic tobacco operations.
NABISCO HOLDINGS CORP. (NA)
First Half 2000 special items totaled $9 million income ($0 after tax) due to the following:
— Second quarter special items included in other items include:
a restructuring credit of $27 million ($18 million after tax) offset by a loss on the sale of businesses which were included as part of the previously announced agreement to invest in a consortium associated with the purchase of United Biscuits. The loss on the sale of these businesses amounted to $18 million on both a pre-tax and after-tax basis which included a write-off of previously recorded cumulative translation adjustments of $51 million.
First Half 1999 special items totaled $34 million expense ($20 million after tax or $.07 per share) as follows:
— First quarter special items include restructuring-related expenses of $15 million ($9 million after tax or $.03 per share).
— Second quarter special items include restructuring-related expenses of $19 million ($11 million after tax or $.04 per share).
NABISCO GROUP HOLDINGS CORP.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Millions, Except Per Share Amounts)
Three Months Ended Six Months Ended
June 30, June 30,
—————— ——————
2000 1999 2000 1999
—- —- —- —-
NET SALES:
Nabisco Biscuit Company $ 936 $ 897 $ 1,817 $ 1,764
Nabisco Foods Company 733 547 1,364 982
International 589 579 1,146 1,132
——– ——– ——– ——–
Total 2,258 2,023 4,327 3,878
——– ——– ——– ——–
COSTS AND EXPENSES:
Cost of products sold 1,216 1,089 2,363 2,116
Selling, advertising,
administrative and
general expenses 757 703 1,453 1,344
——– ——– ——– ——–
Total 1,973 1,792 3,816 3,460
——– ——– ——– ——–
OPERATING COMPANY CONTRIBUTION:
Nabisco Biscuit Company 146 129 278 250
Nabisco Foods Company 106 73 171 122
International 39 48 72 80
Restructuring related
expenses – (19)(B) – (34)(G)
——– ——– ——– ——–
291 231 521 418
Headquarters (6) – (10) –
——– ——– ——– ——–
Total 285 231 511 418
Amortization of trademarks
and goodwill (55) (54) (110) (107)
Other items 9(A) – 9(A) –
——– ——– ——– ——–
Operating income 239 177 410 311
Interest and debt expense (75) (90)© (147) (188)(H)
Other income (expense), net (2) – (4)(F) (10)
——– ——– ——– ——–
Income before income taxes 162 87 259 113
Provision for income taxes 67 36 105 45
——– ——– ——– ——–
Income before minority
interest in income of Nabisco
Holdings 95 51 154 68
Less minority interest in
Nabisco Holdings 19 13 31 20
——– ——– ——– ——–
Income from continuing
operations 76 38 123 48
Income (loss) from operations
of discontinued businesses,
net of income taxes – (42)(D) – 24(D)
Gain on sale of R.J. Reynolds
International, net of $1.9
billion of income taxes – 2,970 – 2,970
——– ——– ——– ——–
Income (loss) before
extraordinary items 76 2,966 123 3,042
Extraordinary items – loss on
early extinguishment of debt,
net of $149 million of income
taxes – (279)(E) – (279)(E)
——– ——– ——– ——–
Net income (loss) 76 2,687 123 2,763
Less preferred stock dividends – 4 – 8
——– ——– ——– ——–
Net income applicable to
common stock $ 76 $ 2,683 $ 123 $ 2,755
======== ======== ======== ========
Net income per share – Basic:
Continuing operations $ 0.23 $ 0.10 $ 0.38 $ 0.12
Discontinued operations – 9.01 – 9.21
Extraordinary items – (0.86) – (0.86)
——– ——– ——– ——–
Net income $ 0.23 $ 8.25 $ 0.38 $ 8.47
======== ======== ======== ========
Net income per share – Diluted:
Continuing operations $ 0.23 $ 0.10 $ 0.38 $ 0.12
Discontinued operations – 9.01 – 9.21
Extraordinary items – (0.86) – (0.86)
——– ——– ——– ——–
Net income $ 0.23 $ 8.25 $ 0.38 $ 8.47
======== ======== ======== ========
Cash net income $ 112 $ 2,723 $ 194 $ 2,834
======== ======== ======== ========
Average number of common
shares outstanding (in
thousands):
Basic 325,853 324,769 325,808 324,411
======== ======== ======== ========
Diluted 327,782 325,116 326,797 324,709
======== ======== ======== ========
NABISCO GROUP HOLDINGS CORP.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Millions, Except Per Share Amounts)
(Continued)
(A) Consists of a $27 million credit ($14 million after tax, net of
minority interest or $.04 per share) to Nabisco Holdings Corp.’s
1998 restructuring programs offset by a $18 million loss on sale
of businesses ($14 million after tax, net of minority interest or
$.04 per share).
(B) Consists of $19 million expense ($9 million after tax, net of
minority interest or $.03 per share) associated with the
implementation of Nabisco Holdings Corp.’s 1998 restructuring
programs.
(C) Includes $24 million expense ($15 million after tax or $.05 per
share) related to Trust Originated Preferred Securities redeemed
in the second quarter of 1999 ($276 million of a total of $374
million 9.5 percent Trust Originated Preferred Securities and all
of the $949 million 10 percent Trust Originated Preferred
Securities).
(D) Includes the pre-sale results of R.J. Reynolds International
through May 12, 1999, the results of RJR Nabisco. Inc.’s corporate
headquarters, including a restructuring charge of $143 million,
($93 million after tax), and the results of R.J. Reynolds Tobacco
Company through June 14, 1999. On June 14, 1999, Nabisco Group
Holdings completed the spin-off of its domestic tobacco business
through a stock dividend to its common shareholders.
(E) Includes a $250 million after-tax loss for RJR Nabisco, Inc. and a
$29 million after-tax loss for Nabisco Group Holdings.
(F) Includes $2 million of interest income ($1 million after tax or
$.01 per share) on the investment of funds transferred from RJR
Nabisco, Inc. in satisfaction of certain liabilities assumed by
Nabisco Group Holdings Corp.
(G) Consists of $34 million expense ($17 million after tax and
minority interest or $.05 per share) associated with the
implementation of Nabisco Holdings Corp.’s 1998 restructuring
programs.
(H) Includes $55 million expense ($34 million after tax or $.10 per
share) related to Trust Originated Preferred Securities redeemed
in the second quarter of 1999 ($276 million of a total of $374
million 9.5 percent Trust Originated Preferred Securities and all
of the $949 million 10 percent Trust Originated Preferred
Securities).
Terms:
Cash net income – net income after adding back the after-tax
amortization of trademarks and goodwill.
Operating company contribution – operating income before
amortization of trademarks and goodwill and exclusive of other
items.
NABISCO HOLDINGS CORP.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Millions, Except Per Share Amounts)
Three Months Ended Six Months Ended
June 30, June 30,
—————— ——————
2000 1999 2000 1999
—- —- —- —-
NET SALES:
Nabisco Biscuit Company $ 936 $ 897 $ 1,817 $ 1,764
Nabisco Foods Company 733 547 1,364 982
International 589 579 1,146 1,132
——– ——– ——– ——–
Total 2,258 2,023 4,327 3,878
——– ——– ——– ——–
COSTS AND EXPENSES:
Cost of products sold 1,217 1,089 2,363 2,116
Selling, advertising,
administrative, and
general expenses 750 703 1,443 1,344
——– ——– ——– ——–
Total 1,967 1,792 3,806 3,460
——– ——– ——– ——–
OPERATING COMPANY CONTRIBUTION:
Nabisco Biscuit Company 146 129 278 250
Nabisco Foods Company 106 73 171 122
International 39 48 72 80
Restructuring related
expenses – (19)(B) – (34)©
——– ——– ——– ——–
Total 291 231 521 418
Amortization of trademarks
and goodwill (55) (54) (110) (107)
Other items 9(A) – 9(A) –
——– ——– ——– ——–
Operating income 245 177 420 311
Interest and debt expense (72) (64) (142) (129)
Other income (expense), net (5) (5) (11) (15)
——– ——– ——– ——–
Income before income taxes 168 108 267 167
Provision for income taxes 70 43 109 66
——– ——– ——– ——–
Net income $ 98 $ 65 $ 158 $ 101
======== ======== ======== ========
Net income per share:
Basic $ 0.37 $ 0.25 $ 0.60 $ 0.38
======== ======== ======== ========
Diluted $ 0.37 $ 0.24 $ 0.59 $ 0.38
======== ======== ======== ========
Cash net income $ 143 $ 110 $ 247 $ 189
======== ======== ======== ========
Average number of common
shares outstanding (in
thousands):
Basic 264,795 264,664 264,729 264,700
======== ======== ======== ========
Diluted 267,929 266,894 267,281 266,968
======== ======== ======== ========
NABISCO HOLDINGS CORP.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Millions, Except Per Share Amounts)
(Continued)
(A) Consists of a credit to the 1998 restructuring programs of $27
million ($18 million after tax or $.07 per share) and a net loss
of $18 million (before and after tax or $.07 per share) from
businesses sold.
(B) Consists of $19 million expense ($11 million after tax or $.04 per
share) associated with the implementation of the 1998
restructuring programs.
(C) Consists of $34 million expense ($20 million after tax or $.07 per
share) associated with the implementation of the 1998
restructuring programs.
Terms:
Cash net income – net income after adding back the after-tax
amortization of trademarks and goodwill.
Operating company contribution – operating income before
amortization of trademarks and goodwill and exclusive of other
items.
